The Ultimate Guide to FBA Shipping
New to Amazon? Amazon FBA vet? Amazon FBA shipping is its own arduous process, but we’re here to walk you through a few things:
- Steps for creating and sending FBA shipments
- FBA shipping Fees
- Pros and cons of FBA shipping
- How 2020 has affected FBA shipping rules
- Benefits of doing FBM and FBA at the same time
What is Amazon FBA?
If you already know what Amazon FBA is, just skip down to the next section!
For total beginners, read on.
The short answer:
- You create your product page/listing
- You ship your products to Amazon’s fulfillment center
- When a customer orders your product, Amazon picks, packs, and ships it to them
- You pay Amazon a portion of the sale
- Wash, rinse, repeat!
For those new to the Amazon world, Amazon FBA stands for “Fulfillment by Amazon.” In the good ol’ days of e-commerce selling on eBay and Amazon FBM (“Fulfillment by Merchant”), you would post your listings, make your sale, and then pack and ship your product directly to your customer.
That method is still very much alive and well, especially with smaller sellers, or sellers creating handmade items or specialty goods.
Amazon FBA, however, is about convenience, speed, and volume. In many ways, it’s more hands-off in that you don’t have to directly handle and ship the goods, or even touch the bulk of customer service. Some sellers even ship their product directly from their manufacturer to Amazon, meaning they never even see or touch their product!
With Amazon FBA shipping, you create your product listings (or product pages), but instead of packing and shipping the products to the customers yourself, you send your inventory to Amazon’s warehouses and fulfillment centers. There, they store your items and then pick, pack, and ship them when your customer purchases from you.
When customers have basic customer service questions like returns and replacements, Amazon will also handle that for you. Customers will still have the ability to directly message you, the seller, but most of the time their basic questions will get resolved through Amazon’s customer service.
Pros and cons of FBA shipping
The main benefit of Amazon FBA is probably the convenience. As we’ve mentioned, in some cases you hypothetically don’t even need to touch your product. The ability to send your inventory over to someone else to store, process orders, pack, ship, and even perform customer service is a model that has been pioneered and grown to a grand scale by Amazon.
Because Amazon handles most of the logistics for you, you can source/create your products, put together your listings, and start making sales in a relatively short amount of time.
Using Amazon FBA grants you the benefit of using their partnered carriers, both as incorporated into their per-product FBA handling/shipping fees, and in how much it costs you to send your inventory to Amazon.
Shipping boxes and pallets is not an inexpensive endeavor, but by using Amazon’s partnered carriers (and sometimes Amazon carriers themselves), you score deep savings on both freight and small parcel shipping.
For example, in our Project X case study, we sold a coffin shelf that, when we broke down Amazon FBA fees, only cost us $5.80/unit to have Amazon fulfill and deliver in one to two days! Were we to pay FedEx or UPS to do 1-2 day shipping, the shipping costs would be excessive – probably at least $40 on shipping alone.
Prime shipping – because Amazon customers are impatient
Amazon favors FBA items because it has more control over the shipping time and speed. Prime customers, in turn, have become accustomed (read: spoiled) by the speed of Amazon’s Prime shipping, and will often pass on FBM items if a suitable FBA alternative is available.
Selling your products via FBA shipping is favored by both buyers and Amazon itself (meaning Amazon will rank you above FBM-only items).
Remember that Amazon is a marketplace. People who come here are ready to buy, unlike people who casually browse elsewhere and happen to see an advertisement or other product promotion.
Selling on Amazon FBA takes a lot of the legwork of advertising and marketing out because Amazon customers are already ready to spend.
Easy to scale up and grow
The FBA shipping formula is easy to duplicate and easy to scale up. Once you’ve established a foothold and learned the ins and outs of the Amazon FBA model, you’ll find branching out to other products or scaling up your current products is relatively easy versus other business models.
A lot of fees
Like we’ve said and will continue to say – you’re paying for the convenience of Amazon handling most of the sales and shipping process for you, and that has the potential to cut into a good chunk of your profit margin. For that reason, make sure to do your math.
You’re at the whim of Amazon
Every Amazon vet has a story about Amazon itself disrupting their workflow and profits with some new set of arbitrary rules. It happens. The landscape constantly changes, thanks to them.
We go more into FBM vs. FBA below, but do be careful about putting all of your eggs into the Amazon FBA shipping basket. Amazon is merciless in enforcing rules, and even an accidental violation can cut off your income.
This is a big reason why a lot of Amazon sellers also branch out to other ecommerce channels like Shopify, Etsy, Walmart, and so forth. For many, Amazon is only the gateway to other ecommerce opportunities.
You’ll also be at the mercy of Amazon shipping schedules – for example, during Q4/holiday season, it can take over a month to get your inventory checked in to Amazon. During COVID, delays have also been notorious.
We go more into the benefits of doing FBM and FBA at the same time further down.
FBA isn’t free – you are paying Amazon for the service. The fee structure is fairly complicated, but overall boils down to:
- A commission fee (called a “referral fee”) based on your product category
- An FBA fee based on your product weight and size category
- Shipping fees based on how much it costs you to send your inventory TO Amazon
- Storage fees if your product isn’t selling through in a timely manner
- Monthly $40 fee as a professional seller
- Per-unit label fees if you opt to have Amazon (instead of yourself) apply barcodes to your product packages
- And more!
Exciting, right? Fees aren’t the most fun part of the FBA shipping process, but you do need to know them to know how much you’ll actually be making.
While your head is in the ‘fees’ space, we also recommend our FREE Chrome extension. In it, you’ll find the Profitability Calculator, which automatically predicts your total fees for a product with an itemized breakdown.
With Profitability Calculator, simply navigate to any Amazon listing similar to what you think you’d like to sell, then open the calculator. It uses the information from that listing to create a template with estimates; you can customize any field to enter your own numbers such as anticipated cost per unit to manufacture.
How to create FBA shipments/shipping plans
Here’s our FBA shipment creation walkthrough. When you create your shipping plan, you’ll enter:
- The products you’re sending and their quantities
- Shipping methods and carriers (aka small parcel via UPS or freight/LTL/FTL)
- If you’re prepping your own products or if you want Amazon to do it (such as barcode labeling)
Note that at any point during this process, you can choose one of the six tabs at the top of the Send/replenish inventory page to go back to a previous tab.
1: Create a new shipping plan
From your Manage Inventory page in Seller Central, find the product you want to create a shipment for. In this example, we’ll use our favorite coffin shelf (in purple!).
Choose “send/replenish inventory” from the drop down menu on the right.
Note that, for bulk inventory replenishment, you can use a spreadsheet to enter data, but as this is a beginner’s guide we won’t get into that here.
2: Choose how you’re packing/sending your products
Choose “individual units” or “case pack” depending on how you send your products in.
Choose “individual units” if you have random products or random amounts of products in each shipping box.
Choose “case pack” if you have the SAME amount of the same product in every box (for example: five shipping boxes or case packs each with six identical products).
3. Name your shipping plan and enter amount of cases and units
Here you should rename your shipping plan (in the upper left) to keep better track of them. You might not think they matter, until you have multiple shipments and you’re trying to remember when you sent what!
You’ll also enter the number of cases and the units per case. The total number of units will be displayed based on these numbers, so verify they are correct!
4: Choose package prep options
In most cases you’ll likely choose the ‘Merchant’ as “who preps?” since your products should be packed and ready to sell.
It’s costly to ask Amazon to do this for you, but if you do want to just send them a box full of random unpacked items, you’ll choose an option from the prep guidance dropdown menu such as “glass” or “fragile.”
Otherwise, just choose “no prep needed.”
5: Choose labeling options
Here, you’ll choose how to apply the Amazon barcode labels. (If you need more info on Amazon barcode labels – check out our blog on it here.)
Basically, if your supplier does not print Amazon barcodes directly onto your packaging, you’ll need to apply them yourself.
We highly recommend doing this yourself over opting to have Amazon do it, as the cost per unit is expensive (at $0.30 per unit!) and adds up very quickly.
Choose “Merchant” under “Who labels?” and verify the amount of labels you need to print. It will default to a certain label template, but you can choose another one from the dropdown list at the bottom of the page.
Click “Print labels for this page” to be given the printable label pages. It will default to the amount of units in your shipment, though you can opt to print a different number.
When affixing your labels to your packaging, remember to COMPLETELY cover up any existing barcodes.
6: Review and approve shipment locations
Once you get to this step, Amazon will allocate your inventory based on quantity, location, demand, and probably a million other criteria we don’t know about.
In this example, we got lucky in that Amazon decided to send all of the case packs to one location in the same state (in this case, Stockton, CA).
At this point we highly recommend you rename your individual shipment(s) too, in order to keep track of them as they move through the check-in process.
Sometimes you won’t get so lucky, and your inventory will either be sent farther out (meaning higher shipping costs for you), or even split into multiple shipments with some being closer, and some possibly being across the country.
IT IS IMPORTANT TO NOTE THAT IF THIS HAPPENS:
You cannot simply send inventory to the closest shipment designated, and then cancel the other shipments. This is a “black hat” tactic and Amazon will penalize you – up to and including suspending your selling privileges.
Do NOT try to game the system this way. (And yes I am speaking from experience).
After approving your shipment(s), click on “work on shipment” next to the shipment (there will be an individual button for each if you have multiple shipments).
7: Verify the unit amount again
This is your last chance to verify you’ve entered the right amount of units. If you’ve made a calculation error, you can correct the unit amount up to 5% or 6 units.
In our case, since we’d entered 60 units, we could change the units sent to between 54 and 66 units.
If you need to make a larger adjustment, you need to delete the shipment and start over.
Also note the Shipment ID that has been assigned to your shipment. This will be referenced in
future communications regarding this shipment.
8: Choose a shipping carrier
Here you’ll choose whether you want to send via Small parcel delivery (SPD) or Less than truckload (LTL).
Small parcel delivery is great for smaller shipments that wouldn’t fill up most of a pallet. For beginning and smaller sellers, this is likely what you’re going to be doing. It’s basically like sending your friends and family some boxes via UPS.
Choose “Small parcel delivery” and “Amazon-Partnered carrier.” Shipping through Amazon’s carriers comes with a steep discount, so unless you have a BETTER discount through your own UPS or other carrier account (such as your own corporate account or if you work for a carrier), you should stick to Amazon’s partners.
9: Enter packing information
Here you’ll enter the dimensions and weights of your packages. Again you’ll enter case pack number and units per case pack (unless you chose individually packed in the beginning).
Note that box dimensions cannot exceed 25” on any side.
Stick to the default “Use web form” to enter this info.
Reminder – you CAN upload a spreadsheet with your packing list, but that’s for more advanced sellers, so we won’t go into that here.
10: Print your shipping labels
If you have a Zebra thermal printer, this is the easiest way to print and affix labels. If you don’t have one, I highly recommend investing in one as you start to get serious about FBA shipping.
Here you’ll choose how to print your labels, and enter an estimated ship date (but it’s not set in stone and you CAN change it if you need to).
Note that these labels are different from your earlier barcode labels. The barcode labels are stickered to your individual products. These FBA box ID labels AND shipping labels are affixed to your shipping boxes.
Make sure both the FBA ID and shipping labels are clearly visible to facilitate easier inventory check in (and lessen delays in getting your inventory up for sale).
11: If you chose LTL, enter your pallet information
We aren’t going to get into the nuances of LTL shipping here since beginners will likely be sticking to small parcel for now, but here’s the information you would enter if you were shipping via LTL.
12: Calculate and approve the shipping charges
After you’ve entered all your box information, you’ll hit “calculate” and be shown the estimated cost to ship. Once you approve it, you have 24 hours to void those charges in case you made a mistake.
Otherwise, that amount will be billed to your Amazon seller account.
Once you’ve approved the shipping charges, you’re good to go! Finish out the shipment and have your carrier pick up your boxes, or drop them off at the designated carrier yourself.
But wait – there’s an easier way
We’ve walked you through how to create Amazon FBA shipments manually using Amazon Seller Central – however, Helium 10 has already streamlined it for you because … that was a lot of steps, wasn’t it?
With our new Inventory Management tools, you can simplify the FBA shipping process from inside the Helium 10 toolsuite.
And this isn’t just for the shipment creation process! This is for every step of the way – from supplier management, purchase orders, inventory forecasting, quantity updates, and more.
You CAN do both FBA shipping and FBM shipping
We just want to make it clear – it’s not an either/or situation.
You absolutely can sell both on Amazon FBA and via FBM at the same time.
FBM is great for expensive, slow, and large items
Some items, especially slower-moving, more expensive, unique/rare/handmade, and/or very large items you might find are easier to sell and ship via FBM.
Remember, Amazon will charge you long-term storage fees based on size – so if certain products you sell are slow but large and/or highly profitable per unit, you might want to consider keeping those as FBM.
As an aside – that’s what we did at one of the previous companies I worked at. We sold a gigantic FAO Schwarz 8-foot-tall stuffed giraffe for children. It required its own pallet and while already expensive to ship, would have been astronomically more expensive to sell via FBA.
Whenever I needed to arrange for freight pickup, the conversation went something like this:
UPS agent: Is the pallet stackable?
Me: Uh … I’m not sure … technically no, I don’t think so.
UPS: What is the item?
Me: A life-sized giraffe.
Me: It’s like eight feet tall.
UPS: (typing on computer) So … giraffe on non-stackable pallet …
At $500 retail cost per unit, about $200 of that got eaten up by freight and referral fees. The FBA fees would probably have been way more expensive, or perhaps even impossible.
FBM helps you avoid putting all your eggs in the FBA basket
Other benefits to doing both FBM and FBA at the same time are ensuring your eggs aren’t all in one basket.
COVID has been a great example of this; throughout the year as things progressed, Amazon restricted FBA sellers from sending inventory in unless it was classified as “essential goods” (remember the great toilet paper and hand sanitizer famine?) and has continued to set special limits on FBA inventory.
Amazon’s lead times for checking in inventory have also been incredibly delayed. Under normal conditions, depending on your location, the FBA center’s location, and your inventory shipping method (small parcel vs. freight), it wouldn’t take more than a couple weeks to get inventory checked in and actively for sale on Amazon.
Now with everyone turning to online shopping even more than before due to social distancing and quarantining, Amazon (and other ecomm companies) have been both understaffed and overworked.
This inventory check-in delay is also notoriously bad around Q4 (October-December with overflow into January) due to holiday shopping, but that’s still more predictable than COVID.
In any case, for those sellers who sell all or some of their inventory through FBM, in this situation they came out ahead.
It’s a numbers game
And it’s one you can win. Navigating FBA shipments does require somewhat of a learning curve, but to Amazon’s credit they’ve tried to make it as streamlined as possible – and it is, as long as you pay attention to details and ensure you’re entering all of your inventory info correctly.
Was this guide helpful? Got any other questions about the shipping process? Let us know in the comments.
Once you master FBA shipping, you’ll be well on your way to starting and growing your Amazon FBA business!
- The Ultimate Guide to FBA Shipping - September 11, 2020
- Google Chrome Extensions for (Out of the Box) Amazon Sellers - September 3, 2020
- 5 Ways to Drive External Traffic to Your Amazon Listings - August 26, 2020